EUR/USD: Trapped in a falling wedge ahead of the US midterm elections

The EUR/USD has charted a falling wedge pattern on the daily chart.
The US midterm elections are expected to produce a split congress.
Falling wedge breakout likely on Democrat victory in both houses.

Omkar Godbole FXStreet Contributor

Trapped in a falling wedge pattern, the EUR/USD is currently trading at 1.1384.

The currency pair was solidly bid Friday and looked set to take out the upper edge of the wedge, before a better-than-expected non-farm payrolls number and the confusion surrounding the US-China trade deal put a bid under the greenback.

An overwhelming majority of opinion polls suggest that the Democrats are likely to win back the House, but the Republicans will likely keep the Senate, leading to a divided Congress. Major market moves are ruled out if the midterm elections do produce a split Congress as expected.

A Republican victory in both houses, however, could mean more fiscal stimulus, in which case a falling wedge breakout may remain a distant dream. On the other hand, a Democrat victory in both chambers may hurt the USD and could yield a falling wedge breakout in the EUR/USD (a bear-to-bull trend change). This is because Democrats want to raise the corporate tax rate to fund social programs.

The caution ahead of the midterm elections will likely keep the EUR/USD flatlined today.

Technical Levels

EUR/USD

Overview:
    Last Price: 1.1384
    Daily change: -4.0 pips
    Daily change: -0.0351%
    Daily Open: 1.1388
Trends:
    Daily SMA20: 1.1461
    Daily SMA50: 1.1568
    Daily SMA100: 1.1589
    Daily SMA200: 1.1867
Levels:
    Daily High: 1.1456
    Daily Low: 1.1372
    Weekly High: 1.1456
    Weekly Low: 1.1302
    Monthly High: 1.1625
    Monthly Low: 1.1302
    Daily Fibonacci 38.2%: 1.1404
    Daily Fibonacci 61.8%: 1.1424
    Daily Pivot Point S1: 1.1354
    Daily Pivot Point S2: 1.1321
    Daily Pivot Point S3: 1.1271
    Daily Pivot Point R1: 1.1438
    Daily Pivot Point R2: 1.1489
    Daily Pivot Point R3: 1.1522

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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